audit_findings: 19
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| 19 | wa-sao | 1020959 | 2016-002 | WA | City of Soap Lake | City/Town | 0325 | 5365345 | no_match | Washington State Auditor's Office | Accountability audit — City of Soap Lake | Accountability | 2016 | 2015-01-01 | 2016-12-31 | 2018-05-17 | misappropriation | The City lacks proper oversight for the acquisition, sale and tracking of assets in the Police Department | Background The City of Soap Lake serves a population of about 1,550 Grant County citizens. The City Police Department has four full -time employees, including one Police Chief and two officers. In June 2016, our audit r eported the Police Department did not use assets in an authorized and approved manner and recommended the City strengthen controls over acquisition, tracking and sale of assets. However, our current audit identified continued concerns. Description of Cond ition The Police Department is responsible for most functions surrounding the “cash only” sales of Police Department assets, as well as asset acquisition and tracking, which creates an increased risk for potential misuse and misappropriation. These control weaknesses allowed the following to occur: 1. City records indicate that in March 2015, a Reserve Officer paid $700 to the City for a 1999 Chevrolet Blazer police vehicle. One day later, Department of Licensing (DOL) records show he signed a “vehicle release of interest” form transferring ownership to a close relative of the Police Chief at that time. The Reserve Officer said the former Police Chief asked him to act as the original buyer to avoid the appearance of a conflict of interest. 2. In May 2015, the City acquired a cargo trailer valued at $8,000 through the LESO 1033 military surplus program, which allows law enforcement agencies to acquire military assets for current law enforcement purposes at no cost, except the travel and/or shipping expenses associated with acquisition. Less than a year later, the City traded the trailer to a City Police Officer in exchange for two radar units with a total value of $4,000 according to the sales record. However, the City was unable to demonstrate that the City received the units as part of this particular trad e deal, or that the trade was equitable. Additionally, the buyer listed in the City’s records did not agree to the buyer listed in the DOL sales record. City records showed the buyer as a third party, while DOL records show the buyer was the Police Officer. 3. On October 5, 2016, the City Council approved the Police Department’s request to surplus 125 items, most of which were firearms, based on a Washington State Auditor’s Office Page 11 provided list. One vendor bid on the purchase of the entire lot. A review of this sale revealed the following: The City could not demonstrate it advertised the sale as required by State law (RCW 63.32.020). The list of firearms the City Council approved for surplus was not the same as the list of firearms the vendor received for bid. Three firearms not approved by the City Council were included on the list given to the vendor, and two firearms on the surplus list were not on the list given to the vendor. Police Department employees then personally purchased seven firearms from the vendor. A City police officer purchased three firearms the same day the vendor received them. The current Police Chief purchased four firearms the following day. According to the vendor, it sold these firearms at the same price it paid the City for them. 4. In May 2014, the City established an asset inventory policy requiring staff to track all assets valued over $500 and assign a City asset number. While the City was documenting Police Department asset tracking to meet City policy requirements, the Police Department’s asset tracking had the following weaknesses: Department staff did not consistently add assets to the City’s tracking spreadsheet. We identified 13 assets purchased or acquired through trade, totaling $7,595, directly from Police Department employees, between February 2016 and December 2016 that were not listed on the City’s asset tracking spreadsheet as of April 2017. Assets included firearms and radar units. The City did not independently verify the City’s receipt of these 13 assets. We attempted to physically confirm that these assets were within the City’s possession. However, due to City sales records not including uniquely identifiable information at the t ime of acquisition, we were unable to confirm if these assets were within their possession. We found the Department did have similar assets in their possession, but only based on the item’s general type. Cause of Condition Despite past audit recommendat ions, the City Council and Mayor have not taken action to implement proper oversight or independent monitoring of the acquisition, sale and tracking of Police Department assets. Washington State Auditor’s Office Page 12 Effect of Condition Without adequate tracking and monitoring procedures, asset s are vulnerable to misappropriation, misuse or loss, which City staff might not be detect promptly, if at all. In addition, lack of adequate documentation over Police Department asset sales and surplused items made it very difficult to determine whether the City: Safeguarded assets properly. Received the best price for City assets purchased from or sold to Police Department personnel, which is a possi ble violation of State law (RCW 42.23.070). Suffered a loss. Recommendations We strongly recommend the Ci ty Council and Mayor take actions to adequately safeguard its Police Department assets by strengthening controls over asset tracking. This should include, but not be limited to: Increasing segregation of duties and monitoring over transactions involving City employees Completing independent, periodic inventories Maintaining up-to-date asset listings Documenting adequate tracking information for identification We also recommend the Police Department present complete and accurate information to the City Council for surplus, including identifiable tracking information especially when the disposition of firearms are involved, to comply with State law (RCW 9.41.09 and 63.32.010). We further recommend the City review all purchase and trade sales documentation related to items involving Police Department employees so the City receives the best price benefit and that a potential loss does not occur. City’s Response Thank you for the invitation to provide a written response to the preliminary draft audit report of the City of Soap Lake for the audit period 2015 through 2016. Your preliminary draft includes an audit finding which describes the City's alleged lack of pro per oversight for the acquisition, sale, and tracking of assets in the Police Department. The draft audit report concludes that without "adequate tracking and monitoring procedures", City assets may be vulnerable to loss, Washington State Auditor’s Office Page 13 misuse, or misappropriation. After identifying two 2015 sales of surplus property and a 2016 City Council approval to surplus 125 items, the audit acknowledged the City's 2014 adopted asset inventory and tracking policy while identifying two weaknesses in the police department's internal asset tracking procedures related to not consistently adding assets to the City's tracking spreadsheet, and not independently verifying receipt of newly acquired assets. A new Police Chief was hired in January, 2017. The new administration promptly implemented many reforms to create a more efficient and accountable police department, and the new Chief continues to review and make improvements to the department's internal administration, including asset tracking and inventory. All of the recommendations cont ained in the draft audit report have been addressed by the Mayor and/or the Chief and are substantially completed. A complete asset inventory with description, serial or VIN number, and asset tag number, was provided to the City Council at its February 21, 2018 meeting. The City appreciates the diligence of the Auditor's Office in providing monitoring and oversight to local government operations and welcomes its input and recommendations on how to improve the City's overall performance objectives. Auditor’s Remarks We appreciate the City’s commitment to resolve the issue noted and we will follow- up during the next scheduled audit. Applicable Laws and Regulations The City’s asset inventory policy requires all assets over $500 to be tracked, assigned as property of City of Soap Lake, and assigned an asset number. RCW 42.23.070 (1) prohibits municipal officers from using their position to secure special privileges or exemptions. RCW 43.09.200 Local government accounting – Uniform system of accounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments, and requires the system to exhibit true accounts shoing the receipt, use and disposition of all public property. Chapter 3.3.5.10 of the Budgeting, Accounting, and Reporting System (BARS) manual requires a physical inventory of capital assets. Washington State Auditor’s Office Page 14 | https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1020959&isFinding=false&sp=false | 2026-07-30 13:24:54 |